What's holding back mobile payments

By Michael Lloyd

Apple Pay, Android Pay and other mobile
payment platforms have been in the UK for more than a year, but they have yet
to really take off here.

All the hype, in other words, doesn't
appear to be living up to the reality.

Apple claimed in April 2016 that Apple Pay
was showing promising signs of growth. However, data from research firm
Timetric revealed the service only processed $10.9 billion globally in 2015,
with the majority of that coming from the US.

Here are four roadblocks keeping UK
consumers from ditching their debit and credit cards
in favour of paying with their smartphones.

1. Security
concerns.
As with many new payment technologies, security concerns appear to be a major
barrier to widespread adoption of mobile payments.

In June 2016, a Marketing Sciences Brand
Trust survey
found that 20% of consumers would not trust a mobile wallet from the largest
brands, including PayPal, Apple and Samsung, or any of the biggest British
banks.

Additionally, an August 2016 survey
from anti-virus firm Kaspersky Lab found that 74% of Britons and Americans are steering
clear of mobile payment platforms because of potential security weaknesses. The
majority of respondents said they would be more likely to start using mobile
payment services if they felt they were more secure.

However, the security fears, like the hype
over mobile payments, appear to be overblown.

Mobile payment providers such as Apple,
Android and Samsung do not share your credit card details with vendors, and
they use tokenisation, which replaces sensitive data with unique identification
symbols that retain all the essential information without compromising its
security.

Additionally, smartphones are password- or
thumbprint-protected, and most can be wiped remotely in the event of loss or
theft.

Of course, that's not to say that a thief
or hacker could not compromise a mobile payment. Mobile payments, as with
anything involving access to money, will tempt fraudsters.

2. Contactless
cards are already convenient.
The popularity of contactless cards in the UK may make mobile payments seem
almost superfluous.

Windsor Holden, a Juniper Research analyst,
told
PYMNTS.com that mobile payments might seem like a waste of time to UK consumers
using contactless cards, which are typically accepted in more places.

UK consumers were initially sceptical of
contactless payments, too, though. If the same pattern holds true, today's scepticism
toward mobile payments may soon give way to widespread adoption, Mike
Cowen, head of digital payment products at MasterCard UK & Ireland, said in
an emailed response to questions.

"While it may sometimes feel like we Brits
are a bit slow to embrace new payments technologies, it's worth noting that we
were one of the first countries in the world to launch contactless payments,"
Cowen said. "It took a while to really get going, but we have now really taken
it to heart with over 1.1 billion contactless transactions in the first half of
2016, compared to 1.05 billion for the whole of 2015."

3. Mobile
payments don't offer anything new.
Experts say mobile payment platforms won't really take off until they offer
something over and above what consumers get from contactless cards and other
services.

Mobeewave co-founder Maxime de Nanclas argued
in a September 2016 opinion
piece for Mobile Payments Today that Apple Pay and others might catch on
faster if they add P2P services that let users send money to each other.

It should be noted that Samsung Pay offers
some of these "extras", such as the ability to store loyalty cards and
membership cards alongside payment cards, but the payment platform is not
available in the UK (as of September 2016).

4. A
fragmented market place
The emerging mobile payments industry in the UK is still very much a horse race.

The Marketing Sciences Brand Trust survey suggested
that while confidence in a range of mobile wallet providers is rising, no clear
market leader is emerging. That makes it difficult for one or two providers to
break through and achieve mass adoption.

The fact that different mobile wallets are
accepted at different retailers and businesses is also a major problem. As
such, mobile payment platforms cannot hope to replace debit and credit cards,
which are accepted almost universally.